Q4. Suppose a 3 year bond with a 6% coupon rate that was purchased for $760 and had a promised yield of 8%. Suppose that interest rates increased and the price of the bond declined. Displeased, you sold the bond for 798.8 after having owned it for 1 year. What should be the realized yield ?
type the answer please
Realized yield = ((Selling price + Coupon amount) / Purchase price)^(1/n) - 1
= (($798.8 + ($1000*6%)) / $760)^(1/1) - 1
= ($858.8 / $760)^1 - 1
= 1.13 - 1
= 0.13 or 13%
Realized yield = 13%
Q4. Suppose a 3 year bond with a 6% coupon rate that was purchased for $760...
please write with hand draw Q: Suppose a 3 year bond with a 6% coupon rate that was purchased for $760 and had a promised yield of 8%. Suppose that interest rates increased and the price of the bond declined. Displeased, you sold the bond for 798.8 after having owned it for 1 year. What should be the realized yield ?
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